New Effort To Limit Annuities

February 05th, 2008 | Category: Reverse Mortgage

So far it’s just an view on Capitol Hill, but if passed a Senate bill would significantly impact reverse mortgage originations.

S. 2490 — the Reverse Mortgage Proceeds Protection Act — was introduced in December by Sen Claire McCaskill(D-MO). The bill would get to an issue we have repeatedly noted — the use of reverse mortgages to ultimately fund high-cost annuities with steep prepayment penalties.

The legislation specifically provides that “not later than 6 months after the term of enactment of the Reverse Mortgage Proceeds Protection Act, the Secretary shall, in consultation with other relevant Federal departments and agencies, promulgate regulations to help protect elderly homeowners from the marketing of financial and insurance products not in the interest of such homeowners, including the marketing or sale of

an annuity as a condition of obtaining any home equity conversion mortgage. In developing the regulations called for under that subsection, the Secretary shall consult with consumer advocates (including recognized experts in consumer protection), industry representatives, representatives of counseling organizations, and other interested parties.”

It’s crucial to say that we have had several loan officers who have said that they are specifically prohibited from selling annuities in connection with reverse mortgages. whether you are a loan officer with a similar standard please feel free to add your name to the list.
For background, see:

Should that Retiree Grab An Annuity?

Another Tale of Woe

How To Stop The Rip-Offs

Orginal post by Peter G. Miller

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